A real living wage is still out of reach for low-paid workers

As the wealth inequality continues to increase in America and Puget Sound, those making minimum wage or close to it are increasingly pinched in the regional economy.

Minimum wage increases have been approved by voters in recent years, including the Seattle $15 minimum wage and a statewide measure in 2017, which will increase the minimum wage to $13.50 an hour by 2020.

However, this still falls short of the living wage needed, according to the MIT Living Wage Calculator, which pegs a living wage at $13.88 an hour for King County for a single person.

The required income more than doubles for a single parent with one child.

These calculations leave virtually no room for anything other than bare necessities, and even then, other costs can regularly end up being more expensive than what is allocated. It also doesn’t account for any sort of long-term or emergency savings.

The economy both locally and nationally has been experiencing an uptick, but much of that wealth has not made its way into the pockets of low-wage workers, said Marilyn Watkins of the Economic Opportunity Institute (EOI).

“A lot of the benefits of the economic growth have continued to go to the very top, to CEOs, to corporate shareholders,” she said.

While this may not be news for anyone paying attention since the Recession began in 2007, the effects of low wages are still being felt by many families.

After rent assumptions, food and travel costs, the MIT calculator only has $2,800 left over for someone making $13.88 an hour to use on activities that meaningfully enrich their lives.

Misha Werschkul is the director of the Washington State Budget and Policy Center.

“The goal is to get to where people have income that can go beyond just the basics,” she said of a real living wage.

Minimum wage in the state is only $11.50 an hour, meaning that employees who work for businesses in places with high costs of living, like Redmond, make far less than is needed to survive.

According to the EOI, which pegs the minimum required income to be self-sustaining slightly lower than the MIT calculator, King County, Snohomish County and Clark County have the larges disparities between a minimum and survival wage in the state.

“Really in no county in Washington state is the minimum wage enough to meet basic needs,” Werschkul said.

According to data from the City of Redmond, roughly 32 percent of jobs in the city pay less than $50,000 annually while the average monthly rental rate was $1,845, well above what low- or even some moderate-income workers can afford.

But what would a real living wage look like for workers in Puget Sound?

This is a difficult question to answer and relies on how one defines a “living wage.”

However, the basic self-sufficiency wages are higher than the state minimum wage, but also far lower than what could provide a standard of living many people think of as a truly living wage, which could provide for any activities or commodities beyond simple sustenance.

Watkins said there have traditionally been three ways that workers can increase their wages.

The first is through minimum wage legislation, like the statewide increase or the $15 an hour minimum wage implemented by the City of Seattle.

This helps the lowest earners and those slightly above it.

The second is unionization, which Watkins said has been a traditional avenue for increasing wages.

Union membership has declined over the past four decades due to union-busting legislation and has led to far fewer people receiving protection from organized labor.

The last way Watkins said workers generally see increases in wages is when unemployment falls and businesses are forced to pay more to retain and attract workers.

King County had an unemployment rate of 3.6 percent last December, which is the lowest in the state.

Watkins said it has only been in the last year that workers have started to see benefits of a lowering unemployment rate after a decade spent recovering from the Recession.

While many workers struggle to make ends meet, other classes of people have been soaring by.

The wage gap between CEOs and workers has increased dramatically in the last 50 years.

In 1965, CEOs in the private sector were making roughly $843,000 while their workers, on average, were making $40,000 annually, according to data from the Economic Policy Institute.

In that time, CEOs got a massive raise, with earnings jumping to $15 million annually compared to the average worker’s wage of $53,000 annually.

A common stereotype of minimum- or low-wage workers is they are young or unmotivated, but as the local economy continues to place a premium on high-paid tech workers, workers not employed in those fields have been put at a disadvantage.

Werschkul said that one-in-five parents in the state are raising families on minimum wage.

“I think the composition of who’s working low-wage jobs in our state, the composition has fundamentally changed,” she said. “…This is not just an issue that impacts teenagers or people in their first jobs.”

Many of these jobs have irregular schedules leading to a lack of income security.

The self-sufficiency wage calculators assume workers are receiving full-time incomes. Irregular or part-time work further reduces workers incomes.

It’s not just low wages that hurt workers but also a lack of a social safety net, Watkins said.

Health care expenses continue to rise as many employers and insurance companies pawn off more costs on workers, leading to increases in cost sharing and co-pay rates.

Child care is also expensive, especially for single-parent families, and property taxes that go into effect this year will raise tax rates by an average of 17 percent in King County.

The raises came from a Republican-led funding fix for the McCleary Decision, where the state Supreme Court ordered the Legislature to fully fund basic education.

It essentially created a scheme where wealthier taxing districts would be taxed at a higher rate to help fund poorer districts.

Unlike many other states, Washington does not have an income or capital gains tax, leading to it having the most regressive tax structure of any state.

State funding comes largely from property and sales taxes, Watkins said.

These fall more heavily on low- and moderate-income people as a percentage of their incomes.

Increases in property taxes will likely be passed on to renters in the form of rent hikes.

Watkins attributed many of these problems to a “bootstrap” mentality, whereby people “pull themselves up by their bootstraps.”

“I think it’s pretty clear that just working hard isn’t enough,” she said. “There’s a lot of people who work very hard and are barely able to make it — stuff does happen.”

Despite this, Watkins did see some silver lining.

These include the passage of Initiative 1433, which was approved by voters in 2016.

It required employers to provide paid sick leave beginning Jan. 1 of this year, put in place a plan to increase the minimum wage to $13.50, ensured tips were given to employees and protected employees from retaliation for exercising their rights.

Additionally, it will allow workers to apply for up to 12 weeks of paid leave for personal illness, pregnancy or family illness, according to the state website.

“Everybody benefits when all kids are entering kindergarten prepared to do well in school, we all benefit from healthy, thriving families, we all suffer when there’s not enough adequate housing for folks,” Watkins said.

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